3 Things to Be Wary of in a Bull Market

Avoid getting burnt when markets are looking hot by avoiding these three common mistakes

Dan Kemp 1 October, 2014 | 9:58AM
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Dan Kemp: There are three things that investors need to be wary of in a bull market. The first is extrapolation. Markets are cyclical. They go down as well as up. It's not different this time and ignore anyone that tells you it is. 

The second is complacency. Analysts tend to get very lazy during a bull market. The seeds of the next bear market have already been sown. We won't see their fruit until later on. Our job is to uncover those problems now while it's still summer time. 

And the third problem is following the crowd. Again, at this point in the market we see people tend to go along with the bullish outlook that everyone has. The crowd is simply a source of profit for contrarians. You don't make money by following the crowd but by being different. 

So be aware of all of those things at this point.

Read more about how to allocate your assets for a smooth investing journey here.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Dan Kemp

Dan Kemp  is Chief Investment Officer, Morningstar Investment Management EMEA